Heat Networks Delivery Models

1. Introduction

Heat networks are one of a number of low/no regret technologies for heat decarbonisation identified in Scotland’s Heat in Buildings Strategy^[8]. Scottish Government has set ambitious targets for their deployment, supported by a range of policy initiatives, financial incentives and regulatory measures. These will help to build skills and capacity, facilitate the identification and development of projects, and the regulation of heat network operators. However, based on the current rate of deployment and outlook on project pipeline, it is unlikely that statutory targets will be achieved without further intervention.

This report, prepared by Scottish Futures Trust for the Scottish Government, assesses the potential roles that a range of delivery models (alongside a number of complementary enabling structures/mechanisms) could play in helping to accelerate the pace and scale of heat network deployment. It makes recommendations on interventions Scottish Government could make in relation to certain models.

The methodology for this report included: consideration of how delivery models should be defined and characterised in the context of heat networks; stakeholder engagement with local authorities, contractors, investors and advisers to understand the challenges to deployment at the required pace & scale within the current policy and regulatory environment; identifying the features that a successful delivery model should encompass; analysis and evaluation of a broad range of established, emerging and new (for heat networks) delivery models against the agreed success criteria; and developing a set of recommendations in relation to the various models.

The remainder of this report is structured as follows:

• Section 2 – Overview of policy & regulatory landscape – summarises the legislative, regulatory and policy environment for heat networks in Scotland and (where relevant) the UK;
• Section 3 – Challenges to achieving pace & scale – considers the challenges facing project developers (public and private sector) in project delivery, taking into account stakeholder feedback from local authorities, contractors and investors;
• Section 4 – Attributes of a successful delivery model – describes the set of attributes that models should have in order to make a meaningful contribution to policy outcomes;
• Section 5 – Definition & features of a delivery model – defines what is meant by a delivery model for the purposes of this report, and the main features used to characterise models;
• Section 6 – Delivery models – describes each of the delivery models to be evaluated, categorised as: existing / well-established models; emerging models; and models that have not been deployed for heat networks in the UK to date. This section also includes a number of enabling mechanisms that could complement both existing and new delivery models;
• Section 7 – Evaluation – a detailed assessment of each delivery model against the agreed set of attributes, taking into account stakeholder feedback; and
• Section 8 – Preferred delivery models & recommendations – provides, taking into account the evaluation, a range of recommendations against each delivery model.
• Appendix A – Stakeholder engagement – list of organisations – local authorities, contractors, investors and advisers that participated in the stakeholder engagement exercise.
• Appendix B – Evaluation scores – scores for each delivery model against each attribute.